Hertz is in talks to pay $87.50 a share, said the people, who asked not to be identified because the discussions are private. The companies’ boards were scheduled to meet today to consider approving the transaction, these people said. At that price, Tulsa, Oklahoma-based Dollar Thrifty would get 8 percent more than its closing price of $81 (DTG) on Aug. 24.
Hertz Chief Executive Officer Mark Frissora has tried for more than five years to acquire Dollar Thrifty, in what may be the last combination of major U.S. car rental companies that competition regulators would probably tolerate. Dollar Thrifty shareholders rejected Park Ridge, New Jersey-based Hertz’s 2010 bid of about $1.2 billion. Frissora made another offer last year that he later withdrew, citing market conditions.
Hertz, Enterprise Rent-A-Car, and Avis Budget Group Inc. (CAR) together control about 75 percent of the market, with Dollar Thrifty at 5 percent, according to a February report from IBISWorld. No other competitor has more than 1 percent market share, IBISWorld said.
Anna Bootenhoff, a spokeswoman for Dollar Thrifty, and Richard Broome, a spokesman for Hertz, weren’t immediately available for comment.
Hertz, which reaffirmed last month it wanted to buy Dollar Thrifty, began contacting some Dollar Thrifty investors in recent weeks to determine at what price they would sell, said three people familiar with the matter.
As part of the transaction, Hertz has been trying to sell its Advantage unit to satisfy U.S. antitrust concerns. The company plans to sell the business to Franchise Services of North America Inc. (FSN) and Macquarie Group Ltd.’s Macquarie Capital, two people with knowledge of the transaction said.
The purchase price is $16 million, one of the people said. Franchise Services, which operates the U-Save brand, is run by Co-Chief Executive Officer Sanford Miller, the CEO of Budget Group Inc. from 1997 to 2004.
The overall transaction under discussion now includes no breakup fees, the people said. That means that Hertz wouldn’t have to pay Dollar Thrifty if antitrust regulators block the transaction, and Dollar Thrifty wouldn’t have to pay if it took a higher offer from a third party.
The terms of the deal would allow Dollar Thrifty to solicit a higher offer for 30 days, the people said. Parsippany, New Jersey-based Avis ended its previous pursuit of Dollar Thrifty in September 2011, and turned down an approach from Dollar Thrifty to re-engage as recently as last month, a person with knowledge of the matter said at the time.
Dollar Thrifty shares traded below $1 in March 2009; this year they gained 15 percent through Aug. 24.
The new offer is worth about $2.56 billion, based on the 29.24 million shares including options and compensation-related stock listed in its quarterly regulatory filing. Some of the figures may have changed since the Aug. 2 filing that could affect Hertz’s exact cost of the acquisition, said one the people.
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